Faber: Gold May Hit $1,000 Next Year

Bloomberg reports:

Gold may "easily'' rise to a record $1,000 an ounce next year as the dollar weakens and Asian central banks diversify their reserves, said Marc Faber, who advised investors to acquire the metal at the start of a six-year rally.

A "continued'' weakening of the U.S. currency may help gold to climb above its all-time high of $850 traded in January 1980, said Faber, managing director of Marc Faber Ltd. and publisher of the Gloom, Boom & Doom Report. "That's baked in the cake in my opinion,'' he said today in an interview. "Gold is still relatively cheap. It hasn't risen as much as nickel, or oil.''

He might be right about gold being cheap. But I agree with Jean-Marie Eveillard that gold is a form of insurance. And it made more sense to buy the insurance several years back when gold was below $300 an ounce.

That's when I was fortunate enough to buy the Central Fund of Canada (the closed-end fund holding gold and silver bullion). I later sold it -- this was all before launching Controlled Greed.com -- but, heck, selling too soon is a hazard with us value players.

I may be wrong. Yet I'm just not tempted by gold at this time.

Comments

[Sivaram Velauthapillai]

Gold looks risky to me. You probably don't put as much weight on macro issues but the whole gold thesis is pinned on a declining US$. Since almost everyone thinks the US$ is going to decline, and since it has already dropped something like 50% in the last decade, I really wonder how much further it will drop.

My guess is that if there is a capital flight to US$ (chances are high if the US slows down, in my newbie opinion ;) ) then a lot of these investors are going to flee gold...

[John]

I agree with you that it's risky here. Feels like a "buy high, sell higher" kind of play.

I actually like the idea of gold as insurance (to keep repeating myself). I've heard of people keeping a fixed percentage of their net worth in gold (say 10%). They stay disciplined and automatically buy or sell annually as it rises and falls overtime.

I've never done that myself, but it seems it could be a sensible thing to do over the course of a lifetime.

[mika]

I need to confess my view is very opposite, but my view is based for "JustCharts" ie. technical reasons, gold price is very much related for US dollar value and with this wave spike I believe gold minor upwave is now over.